In light of recent news related to auction fees, here is a brief background on the buyer’s premium.
The buyer’s premium was introduced in the 1970’s by Christie’s and Sotheby’s, as a 10% fee, charged to the buyer, on top of the hammer price. Some say it was introduced to help cover operating costs, while others say it was a competitive sales tactic: by charging a fee to buyers, the auction house could reduce the commissions charged to sellers, as a way to help negotiate and secure significant consignments. In reality, it was probably a mix of factors which prompted this new fee.
Buyer’s premiums have steadily climbed over the decades since, with the industry standard now being in the 25–30% range for art and collectibles auctions. The buyer’s premium is charged in addition to seller’s commissions. By splitting fees between the buyer and seller, auction houses can remain competitive and profitable, sometimes retaining an amount that approaches roughly 50% of the hammer price when both fees are combined.
Charging fees on both sides helps cover consistently rising operational costs while still bringing high-quality, one-of-a-kind items to market. Experienced bidders know to incorporate premiums and related fees into their bidding strategy. As premiums have risen over time, the market adjusts, and buyers recalibrate their bid amounts accordingly.
There are critics of buyer’s premiums, especially as they increase in tandem with other rising costs, such as shipping, insurance, sales tax, payment processing fees, and additional surcharges from online platforms like LiveAuctioneers. Critics argue that these stacked costs deter participation, confuse new bidders, and place downward pressure on hammer prices.
Yet, the market shows little sign of suffering from rising fees. Competitive bidding remains strong, and increasing buyer’s premiums and layered costs continue to be readily accepted by market participants.
